I’ve “only” been
covering the pharma and biotech markets for about 11 years now, but I’ve been in the healthcare journalism segment since 1994, so I’ve had plenty
of awareness of the ups and downs of pharma. I’ve seen indirectly what I think of as the “first wave” of major M&A deals in pharma in
the mid- to late-1990s. I still think of what started it all: SmithKline Beckman and the Beecham Group merging to form SmithKline Beecham plc in 1989, Glaxo
and Wellcome merging to form Glaxo Wellcome in 1995 and then Glaxo Wellcome and SmithKline Beecham merging in 2000 to form the GlaxoSmithKline we know
today.

AstraZeneca came out of the merger of Astra and Zeneca in 1999 and Novartis about three years earlier with
the merger of Ciba-Geigy and Sandoz.

And, in recent years, we’ve seen many other big M&As occur for what
I see as the “second wave”—and some that have failed, like the recent attempt to merge Pfizer and Allergan in what would have been the
biggest such pharma deal ever.

Recent years have also seen Big Pharma companies in particular try to reinvent
R&D with outsourcing, innovative corporate-academic risk sharing deals and more. Valeant Pharmaceuticals basically turned its nose up at the notion of
internal R&D and simply went on a spree of acquisitions to buy companies that already had pipelines and marketed products—a decision that might
explain in part why it’s a bit beleaguered now from politicians and investors for its management and drug-pricing practices.

More recently, we’ve seen rare diseases open up as a new avenue for R&D and profitability for pharmas. That was
helped along by the Orphan Drug Act of 1983, which made it more feasible for ventures into diseases that affected only tens of thousands of people—or
even merely thousands or hundreds—to still be profitable for companies to pursue. It really seems to be only in the past few years that we’ve
seen fruit borne from that tree planted in 1983, as we noted in the story “FDA beats the averages on approvals” in the January 2016 issue and in a story in the Market News section of this issue titled “The
diseases may be rare, but their impact is wide.” (found on page 3 of the June 2016 issue and also included below after the end of this online version
of my editorial)

Last year, Medical Marketing & Media quoted Chris Clark, a co-portfolio manager at
RS Investments, as confidently saying, “We’re entering the golden age of orphan drugs. In the next three to five years, the industry will usher
in many successful drugs that will eradicate diseases. Our children won't know the diseases we knew growing up.”

In that same story, it was noted that by 2020, orphan drugs could command nearly one-fifth of the total share of non-generic prescription drug
sales to reach $176 billion in annual sales—that according to Andreas Hadjivasiliou, an analyst with EvaluatePharma. Even though such drugs are aimed
at patient populations of fewer than 200,000 people, orphan drugs generate large per-patient payments.

But then
came the news in my inbox that Catalyst Pharmaceuticals, a biopharmaceutical company focused on developing and commercializing innovative therapies for
people with rare debilitating diseases, announced May 17 that the company is reducing its workforce by some 30 percent—mostly affecting the commercial
team—which is part of Catalyst’s ongoing efforts to conserve cash as it works to complete the requirements for an NDA submission of Firdapse
(amifampridine phosphate) for the treatment of Lambert-Eaton myasthenic syndrome and congenital myasthenic syndromes.

Now, I’m not saying this is a sign that the train is already screeching to a halt on the potential and promise of rare diseases as a profitable
market niche. There are too many companies overall in the pharma/biotech space for me to have comprehensive knowledge; I’m a journalist and not a
market analyst, after all. And there are players big and small, and Big Pharma may still be on to something with making serious plays in rare disease,
whether internally or through collaborations and acquisitions.

But it reminds of the word I just used a few
sentences ago: niche.

Before people get too worked up about how much orphan drugs will drive market
forces and fuel the pipelines and bottom lines of pharmas and biotechs, let us all remember how many other big changes that I’ve already noted have had
mixed success.

Corporate maneuverings and strategy shifts and reorganizations have helped at times, but they have
also flopped in many cases or brought more complexity than clarity. There is no single cure to the problems of R&D costs that plague pharma and make it
so expensive to get a potential therapeutic to clinical trials, much less approval and then—just maybe—profitability or even blockbuster
status.

Rare diseases are a part of the big picture, but the fact remains that the picture is very big. Small and
mid-size companies, as well as academia, often have to be narrow-focused. But looking at the pharma and biotech market as a whole, I want to point out that
what is needed is a holistic view. A comprehensive view. Neither M&As nor innovative partnerships nor orphan drugs will be the answer. All three, and so
many other factors besides, need to be working in harmony.

Otherwise, we will simply replay the game of a people
riding a new wave because so many others are, and then perhaps that wave crashing disastrously against the corporate shores.

FROM JUNE 2016 MARKET NEWS

The diseases
may be rare, but their impact is wide

Looking at the U.S. healthcare market, a disease is considered rare
if it affects fewer than 200,000 people in the nation. In a new report, “Medicines in Development for Rare Diseases,” a collaborative effort
between the Pharmaceutical Research and Manufacturers of America (PhRMA) and the ALS Association, PhRMA put this not-so-small problem in perspective.

“Rare diseases, when taken together, are not that rare at all,” PhRMA writes. “In fact, 30 million
Americans, or 10 percent of the population, have one of the 7,000 known rare diseases, of which 80 percent are genetic in origin. Half of those affected
worldwide are children.”

True, some rare diseases affect very small numbers of people—perhaps as
little as a few hundred Americans—and this complicates diagnosis, treatment and development of potential therapeutics. As we’ve noted before in
DDNews, rare diseases can be a great opportunity for pharmas and biotechs because of the ability to get reimbursed very well for those therapeutics,
but small patient populations can also make many rare diseases of little interest to pharma and biotech companies looking at their bottom line.

Also, as noted in the report, “Developing medicines for patients with rare diseases presents one of the most
scientifically complicated health challenges of our time. The underlying biological mechanisms of a rare disease are often complex, making it difficult to
design and implement research and development strategies. Additionally, due to the inherently small population of patients with a rare disease, recruiting
for and conducting clinical studies can be difficult.”

But as “Medicines in Development for Rare
Diseases” indicates, times are relatively good in the rare disease realm right now, with more than 560 medicines in development for such
ailments.

And the work being done now will help future work, PhRMA points out, pointing out that gaps in knowledge
about the etiology, natural course and others aspects of rare diseases have been one of the challenges in making progress.

As noted in the report: “The underlying biology of the disease may be very complex and poorly understood, and research to fill in the gaps
can be difficult and time-consuming given the small numbers of people with the rare disease. Continued research and improved understanding of rare diseases
will accelerate the development of medicines for rare diseases.”

PhRMA notes that in the past decade, more
than 230 new orphan drugs were approved by the U.S. Food and Drug Administration (FDA). In 2015 alone, nearly half (47 percent) of novel new drug approvals
were for rare diseases, including therapies for cancer, cystic fibrosis, difficult-to-treat high cholesterol and several enzyme deficiency disorders. Many of
the new medicines provide treatment options for patients where there were few or none previously available.

Among
the 566 medicines currently in development for rare disease are:

151 for rare cancers and 82 for rare blood cancers, accounting
for 40 percent of all rare disease medicines in development